Aligning procurement to get more from your marketing spend
Aug 6, 2015 1:18:00 PM
The marketing landscape is an ever evolving entity; with trends, movements and best practices as changeable as the wind, marketers face the often insurmountable challenge of constantly staying ahead of their competition. And, while there are many opinions on where marketers should be focussing their attention, or “the biggest challenges for CMOs today” (a quick google search will deliver a plethora of articles), something that will always remain a critical consideration for marketers is the ability to get more from their marketing spend.
As a CMO myself, I can relate to this challenge. I’m always looking for ways to do more in the face of new budget, time and resource constraints; and nowhere is this challenge more pronounced than in digital. However, working in my favour, my Marketing Procurement colleagues here at Proxima are more than willing to share their knowledge and experience of the digital provider / technology landscape; drawing on insights from across sectors (and clients) to allow me to make smarter investment decisions. A privilege many marketers believe they do not have themselves. But the truth is, they do.
It was this that prompted my involvement in The Digital Disconnect a recently published research paper that explores why the value of digital activity remains opaque, highlights the reasons for poor digital spend practices, and offers a practical guide for gaining true business value from digital marketing through better procurement practices.
How do we determine spend effectiveness?
In my experience, marketers are no stranger to defending the effectiveness of digital; particularly as the wider business often fail to grasp how digital activities (such a content marketing) directly attribute to the achievement of corporate objectives – beyond brand and soft customer activity metrics – into real commercial results.
But do we as marketers really understand how to measure and report on the effectiveness of digital spend? The plethora and diversity of attribution models suggests that this is not the case. Even the most popular attribution models offer very rudimentary ways of tracking the true impact of digital. Many fail to incorporate brand sentiment and customer experience.
And, as companies move away from “spray and pray” marketing practices, and head towards personalisation, profiling and behavioural targeting; marketers are struggling to serve the right content to the right people at the right time and in the right context in terms of their behavioural patterns. This has led to an explosion in the number of external digital agencies engaged by in-house teams.
So, as we increasingly look to third parties to help run our digital activity, how can we be sure that we are achieving spend effectiveness?
With a little help from my friends
That’s where procurement should come in. Not just at the final stages of the on-boarding process for digital agencies (pricing and contracting) but from the very beginning. Procurement should be helping us get a better understanding of the provider and technology landscape - assessing the market and bringing advice and insight on what suppliers can do; innovations in the supply market, and how all of this can tie in with marketing objectives.
For the procurement of digital marketing agency services in particular, procurement should be helping marketers "unbundle" their agencies, helping them to better understand the diseconomies of scale at play, with both the services and the price points. From a service perspective: How does the pricing work? Am I being sold the best product for my specific needs? Am I getting the best value for money possible? How would it work if I broke apart all the elements and used specialist agencies for each part? From a technology perspective: How do the algorithms behind programmatic work? What is the real digital supply chain between agency and media outlet? Is the audience I am reaching real? Is the audience I am reaching the audience I care to reach? How and where are customers engaging with my brand messages – does this impact the likelihood to buy? These are all questions that marketers should be asking, and procurement should be helping them get the answers.
What exactly should procurement be doing?
Take the example of the programmatic buying minefield. We’ve seen many instances where marketers have fallen foul of the dangers of poor programmatic buying practices with controversial, or less than tasteful ad placement, or simply serving ads that don’t deliver the expected ROI. But how can we avoid, or at least mitigate the potential risks associated with buying in real-time? One approach, is to turn to the people who know most about buying – procurement.
Coming back to the example of programmatic, the advantages of engaging procurement in the programmatic buying process are threefold.
- Mitigating risk: Procurement are trained to ask the right (sometimes hard) questions to better understand and advise on the risks, such as the reputational or commercial damage that poor commercial practices might bring. Procurement should then work with you to ensure that not only are these risks identified, but there is a plan to mitigate or contract against them.
- Ensuring value for money: Procurement’s role here is to help marketers understand how each piece of the “programmatic puzzle” is going to contribute to the commercial goal. Procurement should help interpret the algorithms, rules, players and costs at each stage and connect how each of these layers impact commercial objectives and budget decisions.
- Avoiding wastage: New research highlights that around 60% of marketing budgets are wasted annually. And, with a significant portion of this wastage linked to poor programmatic buying practices (e.g. local adverts appearing in national spaces), marketers need another pair of watchful eyes to ensure that every penny spent is contributing to the wider commercial objectives.
Clearly then, it’s time for us marketers to take a different view on what good procurement is capable of achieving.
In my own experience, working closely with some of the leading minds in procurement, it is interesting to see first-hand the value that proper procurement practices can bring in terms of spend effectiveness, greater transparency and better control when it comes to my digital marketing expenditure.
Learn how to effectively align your marketing and procurement functions to achieve spend effectiveness; download The Digital Disconnect research here.
I’d welcome your thoughts, comments, experiences (the good, the bad and the ugly) of working alongside procurement in the context of digital marketing. Please add them to the comment box below.